Friday, September 26, 2008

There were many letters regarding the current financial crisis including the bailout plan and the letter from BB&T’s head honcho…

"I work for a bank that is doing well and I agree with Mr. Allison but not for the obvious reasons. I work very hard at my job to do the right thing for my clients and the bank and my efforts are finally paying off. Now to give my competitors the same equal footing, seems ridiculous. There are better ways to correct this matter and we should not go around giving money to companies because George W says so. We are not sheep and need to act accordingly. As far as executive salary caps, i don't think they should be rewarded for bad behavior but I do think they should be compensated for their service or disservice to the company. Instead of giving them cash, make them take that payout in company stock and hold on to it for year. An then at least they would feel the ill effects of their on bad judgment. Plus, I would like to think 20 years from now we could all be CEO's and I would hate for anyone to put a cap on how much I could make. FYI John Allison is one of the lowest paid CEO's among competitors. Maybe the competition will eventually figure out how things need to be done." - Steve M, Atlanta, GA

"For the most part, Allison is correct. His reference to "Fair Value accounting" in (11) may be confusing to some: this refers to the accounting requirement to record assets at "market value" for purposes of the corporate balance sheet. Remember that MV (by definition) requires a willing seller and a willing buyer; most of the MV write downs do NOT meet this definition. A better accounting value would require that assets (in this case, mortgages) be valued at the discounted value of all future payments. Significantly less volatility and much better match to the underlying value." - D.R., Sacramento, CA

"I appreciate the comments from Mr Allison as it relates to the proposed bail out efforts. I am opposed to the plan as outlined by President Bush this week. I believe a more sound and rational approach to resolving this crisis is called for. To me, this feels like a rush to action that may ultimately benefit those whose poor judgment largely created the current situation and could potentially create a situation that ends up being more harmful to the average American taxpayer." – J.M. San Antonio, TX

It appears that the train may have prematurely left the station on this bailout package and that’s unfortunate. Paulson has panicked Congress and Bernanke is sitting on his hands.

John Allison is absolutely correct that this problem is rooted in actions of Freddie and Fannie. They have slowly, deliberately and with government encouragement moved away from their original purpose and we are now reaping the consequence.

Congress needs to quickly call John Allison and some of his colleagues with similar background and success to assist in a more responsible response to this economic challenge.

John's point that this is a valuation crisis is exactly correct and we could quickly address that issue with appropriate "tax credits" with plenty of other ammunition left.

We obviously need a "market-correction" process that illuminates "irrational competitors" and that's always messy. This bailout package may not accomplish that and may even damage the rational players if not properly structured.

"Paulson has too many friend on wall street and Bernanke is sitting around like a "potted plant". Please congress; hear some other voices. Suffice to say we’ll have a plan and slow down a bit to listen to more rational voices."" – S. Watson, Baltimore, MD

"Allison makes some good points. And BB&T would probably survive the economic downturn whereas Wachovia will go under. That is only right and fair as Wachovia has done some really stupid things and is into the derivative markets for $5 trillion. BOA is another bank that has gone crazy and has $40 trillion in derivatives.

The tax credit for buying homes is a horrible idea. One problem that led to this housing bubble is the home mortgage tax deduction. Bankers love this because it essentially says you can either give your money to the Feds or to the bank. Its a racket dreamt up by bankers. Giving a credit helps get home owners who overbought on the idea that real estate was the goose that laid golden eggs off the hook. Neither greedy bankers or greedy home owners should be bailed out.

But Allison still looks after his own and says CEOs should still make a ridiculous salary even when they've shown they are no smarter then their lowest level worker. So I'd say his interest is not the average man but simply he and his bank." – John G., Denver, CO

Other reader mail ran the gambit of comments and replies….

"I agree with most of what you have to say on this blog, but there are times that you appear a little cruel. I’m a frequent visitor to dating sites since I don’t have the time to meet men in social situations and I’m not a big fan of the bar scene.Your posting about being online made it better for rejection than rejection in person was very depressing to me. I wish you could post something POSITIVE about online dating just to even up the odds for me.Thanks!" – Jennifer C., Chattanooga, TN

"We like your continuing series of articles of American stories.They make us proud to be an American! It’s such a great history lesson, too! Thank you!!" – Roger and Sandy Y., Boseman, MT

"Is there such a thing as the Fourth Reich? I’ve heard of this over and over and the explanations are too complicated.Can you break it down for me?" – Lisa N., Richmond, VA

This blog topic is currently in the writing stage to be post soon.

"You seem pretty up on bicycles. I’m looking for a good solid bike that I can stay in shape and bike on the road rather than trails. What a good one for the money?" – Brent K., Tulsa, OK

For the money, I like the Trek series of bikes. They’re light, well put-together and easy to maintain. www.trekbikes.com

"Are you Jewish?You look like a Jew to me and you act like one, too." - Randy S., Birmingham, AL

Well, okay then. I guess that settles it.

"You left out one when you did your 10 Greatest Hoaxes piece: Smartass Bloggers who think they know everything." – Jerome R., Las Vegas, NE

Sure thing!I’ll add it to Reader’s who think they have Martians in the basement.

"Mr. Walter, there IS a reason we have entitlements as you call it: to assist the poor and underprivileged! Not everyone has the chance to go to college, go to summer camp or let alone put food on the table or even get a good job.We need this kind of assistance to continue for the good of the economy." - Brenda A., Washington, D.C.

No one is denying that there continues to be a need to help, but it ceases to fulfill its purpose if it only allows laziness and assists recipients to live off the fat of the land. It was only conceived to be a stepping stone to a better life – not intended to be a career choice unto itself. People who receive this aid were never supposed to take advantage of it in lieu of becoming self-sufficient with no sense of responsibility or accountability.

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